Deadline looms for decision on car tax

Georgians who purchased a new or used automobile in 2012 or in early 2013 have until Friday to decide if they want to continue to pay annual car taxes or pay a one-time tax up-front.

Under the state’s new car tax system, automobile owners who purchased their cars between Jan. 1, 2012, and March 1, 2013, can either pay annual taxes on their vehicles— based on the cars’ market value — or can choose to pay a one-time sales tax and forego annual tax payments.

The one-time sales tax – officially called the Title Ad Valorem Tax – is based on the higher of the sales price or the fair market value of the car. Fair market value is determined by the Georgia Motor Vehicle Assessment Manual (the value can be appealed with the local tag office).

Owners can weigh the financial benefit of the decision by using the Georgia Dept. of Revenue’s tax calculator at newtitletax.com. Owners have to decide which tax they want to pay by Friday; otherwise they’ll be locked into the annual tax. Owners who already switched to the one-time tax don’t have to do anything.

The decision is generally based on how long an owner plans on keeping a car. If an owner plans to keep a car for four years or more, he or she will save money over the life of the car by paying the one-time tax.

For example, using the calculator, a car with a value of $20,000 would require a $1,300 payment (6.5 percent tax) up-front. If the owner planned to keep the car five years, the owner would pay $1,852.58. The calculator accounts for the car losing value each year. If the owner only planned to keep the car for three years, the annual payments would be $1,208.83.

In addition, sales tax and ad valorem taxes paid on the vehicle to date can also potentially be applied to the one-time tax, reducing the cost further.

Eligible Newton County owners can make the switch at the Newton County Tax Commissioner’s office, where they get their car tags, at 1113 Usher St., Suite 101, Covington, before Friday. Owners should bring the bill of sale for their vehicles to the office along with license and other relevant documentation.

Even if owners opt in for the one-time tax, they still have to register their vehicles annually; the standard tag renewal fee is $20. The owners must still pay the $18 title application fee as well.

For those who purchased, or are planning to purchase, cars after Feb. 29, 2013, they must all pay the one-time title tax. The tax is now 6.75 percent of the value of the car or the sales price, whichever is higher. The tax will move to 7 percent in 2015.

Newton County Tax Commissioner Barbara Dingler said the city processed 24,782 titles between March 1, 2013, and Feb. 25, 2014, which would fall under the new title tax, unless they were purchased by out-of-state residents not staying in Georgia.

The local tax commissioner’s office mailed a total of 14,118 opt-in letters to Newton County residents who purchased vehicles between Jan. 1, 2012, to Feb. 29, 2013.